Employment Law Protections in Italy
In Italy, individual employment contracts and labor relationships are governed by the following in order of precedence:
- The Constitution of the Italian Republic sets forth general labor principles and regulations for many employment issues.
- The Civil Code of 1942 regulates employment and labor matters under Section III Articles 2094-2134.
- Additional laws are passed occasionally by Parliament. Labor legislation has traditionally been continually enhanced in order to better protect employees.
- Regulations can be issued by non-parliamentary authorities.
- National Collective Bargaining Agreements (NCBA) also regulate employment rules.
- Local customs and practices will also influence employment practices, pertaining to issues not already governed by existing legal provisions or by the provisions of a NCBA.
Furthermore, as a member state of the European Union (EU), and a signature of the Treaty of Rome, Italy is subject to EU directives, regulations and the decisions of the European Court of Justice.
Employment Contracts in Italy
In Italy, there is no specific requirement for a written employment contract to be concluded. If written, the contract is not required to be in Italian. However, in order to be valid, certain clauses must be in writing, including the probationary period, fixed-term period and non-competition clauses. In addition, the employer must inform the employee in writing, within 30 days of starting employment, of the following:
- Identity of the parties
- Place of work
- Date on which the contract begins
- Duration of the contract (and specifying whether it is fixed-term or permanent)
- Probationary period (if applicable)
- Job title or category
- Duration of paid holidays
- Working hours
- Length of the notice period (when terminating the contract)
Italy's Fixed Term Contract Terms
Most employment rules are mandatory and cannot be amended by the parties. The exception to this is if more favorable provisions are being provided to the employee.
Employers can lawfully and unilaterally adjust an employee’s role or position, provided the new role or position pertains to the same level and category of classification as was previously assigned to the employee.
Italy's Guidelines Regarding Probation Period/Trial Period
Probationary periods (‘periodo di prova’) are common in Italy and the length varies depending on the terms of the applicable collective bargaining agreement (CBA). However, in all instances, the maximum term for a probationary period is six months.
Regulations and Rules Regarding Working Hours in Italy
In principle, employees must work 40 hours per week, except when more favorable provisions are afforded the employees of National Collective Labor Agreements (NCLA). The duration of the weekly working time cannot exceed 48 hours a week, including overtime. This is to be calculated over a period not exceeding four months, unless the applicable NCLA increases such a period up to six months.
Italian Laws Regarding Overtime
Overtime work cannot exceed a threshold, as prescribed by the applicable NCLA or a maximum of 250 hours per annum. Overtime should only be requested on an occasional basis due to exceptional circumstances, technical requirements, productive reasons or particular events. Overtime must be paid to the employee with an increase of salary. Different rules may apply to middle managers and executives.
Rules Regading Bonus and 13th Month Pay in Italy
The annual gross salary is payable through 13 or 14 monthly instalments depending on the NCLA the employee is under. The 13th month is paid in December and the 14th month is paid in June.
For 2023, employees under the “Tertiary Distribution and Services” National Collective Bargaining Agreement (NCBA) are entitled to a EUR 350 one-off bonus. The bonus shall be paid in two tranches EUR 200 in January 2023 and EUR 150 in March 2023.
Redundancy/Severance Pay in Italy
In any case of termination, the employer must give the employee a severance indemnity (‘Trattamento di Fine Rapporto’ or TFR). For each year of service, the TFR requires payment of 1/13 of the annual gross global salary to the employee. During the employment, the TFR accruals are registered in the financial statements. Alternatively, upon the employee’s request, the accruals can be paid directly to a complementary pension fund. If this option is taken, there is no TFR payment due at the termination date.
The European Court of Justice stated in 2019 that companies must implement an objective, reliable and accessible system to record the working time of their employees.
Trade Unions in Italy
In Italy, unions are primarily organized by the industry sector. All employees within a specific industry belong to the same union, regardless of the function of their particular job or occupational qualifications.
Fixed Term Contacts for Italian Employees
An employment contract normally has an unlimited duration, with the Italian labor framework encouraging the hiring of permanent subordinate employees. However, there are various forms of subordinate employment contracts that allow, under certain conditions, some flexibility to employers and employees.
Employers can hire fixed-term employees for a maximum duration of 12 months, provided they do not exceed 20% of the total headcount. A different threshold can be set forth by the applicable NCLA. The maximum duration does not apply to fixed-term contracts entered into:
- to replace absentee employees
- to meet seasonal needs
- with employees over 55
- for startup reasons.
Fixed-term contracts can only go beyond 12 months, but not more than 24 months, including extensions and renewals, for the following reasons:
- If it is provided for by the collective agreements that are implemented; and
- If there is a requirement for technical, organizational, or productive needs that are recognized by the parties involved. This is applicable only if these needs are not covered by the collective agreements, and in any case, should be done before December 31st, 2024; and
- If there is a need to replace other employees.
A further term can be applied only if at least one of the above “temporary reasons” is present. In any case, this can be no longer than 24 months.
Furthermore, under certain conditions, an employee who works for an employer under a fixed-term contract for more than six months enjoys some rights to priority hiring if the employer is hiring permanently for the same duties.
Under a fixed-term contract, neither the employee nor the employer can terminate the employment before the expiration of the term unless in the case of just cause.
In Italy, every employee must undergo an initial medical examination before starting work.